Tuesday, March 5, 2013

Flip the pages and fill your kart!

With the advent of e-commerce, online shopping took some time to gain momentum in India. Having a bank account was a very normal, online banking still acceptable but buying goods was a novelty experience. Same was with me when I made my first online purchase back in 2008, a book, One Night @ the Call Center by Chetan Bhagat. The magic website that delivered the book was Flipkart.

In early 2007, Flipkart an e-commerce company was established by Sachin Bansal and Binny Bansal and now it is among India’s largest online retailers. Sachin Bansal and Binny Bansal both are alumni of Indian Institute of Technology Delhi who started this company after quiting their jobs in Amazon.com with a vision to become one of the largest multi-category e-commerce destinations in India, with a strong focus on customer service. According to media reports, in 2010, the size of the e-commerce market in India was around INR 95 billions, of which the pure play online shopping market was worth INR 13 billion. While online shopping globally is growing at around 8-10 percent, in India the growth rate is upwards of 30 percent. 

Initially Flipkart started with selling books, flipping pages and the shopping cart to kart, so the name. Gradually they have diversified into a generic e-commerce site, selling CDs/DVDs of music, movies, games and software, as well mobile phones, digital cameras and electronics. Lately they have added up lifestyle goods like perfumes, accessories, bags, baby care and footwear.

Infrastructure Build

The daily operations are managed through four offices located in the four metros, and a team consisting of more than 500 employees. The warehouses are also located in the same cities as the offices. If the warehouses are not present in a city, items are shipped from the warehouse situated closest to that particular city or town. Spreading its network, Flipkart ships products to all parts of the country. They have tie-ups with more than 15 courier companies who deliver their products, Blue Dart, First Flight, Fedex, Aramex and Professional Couriers are some of the courier services used. To places where couriers do not go, the Indian Post is used.

The Supply-Chain process

Buying a book online is easy. Select the book, enter your address, and choose the payment option like credit/debit, net banking or money order. With their latest payment mode-Cash on delivery, Flipkart has successfully pulled student attraction, who generally do not have access to cards to shop online.
The supply chain of all the products is more or less the same. Any difference involved would be at the packing and shipping stage. For example, mobile phones make use of bubble wraps and other buffers for safety during transit so that they reach the customers safely and in good condition. All items, especially the electronic products have transit insurance against theft and damages caused while in transport. As for the cost, the customer pays only for the product. Flipkart bears the cost of delivery and this works as an incentive for them to improve efficiency at every point in the supply chain. The expected time of delivery is mentioned against each item on the website. Using services of courier companies, the Indian Post and in some cases, their own internal logistics arm, the product is delivered to the customer. The delivery time varies between less than 24 hours and 3 weeks depending on the location and availability of the product. If the product has to be imported into the country, it would take between two and three weeks, given that they arrive from the US or UK, and are then shipped across to the customer. The inter-city, trans-zone deliveries are made using air cargo. For satellite cities and others in close proximity, products are transported overnight by train or truck. The Government postal system manages deliveries through their respective channels and transport system. In cities where Flipkart has its warehouses, delivery is on a two-wheeler or bicycle or foot for the shorter distances; many of the local deliveries are made on the same day as on which the order is placed. The company has trained all its team members to be efficient, organized and quick, in order to meet customer expectations.

Use of information Systems

The Company use sales to predict the inventory levels.The Flipkart warehouses are split into multiple areas — inventory, packing, shipping and so on. The stocks are replenished every 24-48 hours. Internally, Flipkart has details of all orders and shipments that need to be carried out. They have an understanding with their associates for tracking systems, reconciliation and MIS (Management Information Systems) reports. The private courier companies in turn have a shipment tracking ID or an airway bill number linked to every package. The customer is also updated about the status of his shipment via email or on the website. The long-term relationships with the shipment companies also help them manage reverse logistics effectively. In an event a product needs to be returned, their understanding with courier partners ensures it happens successfully. Flipkart takes care of the after-sales needs of its customers with regard to delivery of an item or addressing grievances. This could pertain to a delayed delivery by the logistics partner, or addressing issues when an incorrect product is delivered. In the case of electronics, warranty and after-sales service is largely the responsibility of the manufacturer. Flipkart does however facilitate interaction between the customer and manufacturer/service center as and when the need arises.

Future for E-Commerce

India has 11 million online customers now which will increase to 30 million by 2015 which shows that the e-commerce industry with the increased internet penetration will be the service sector's growth engine in India. The industry's size is expected to increase to $11.8 b. Among the challenges faced by the industry is its dependency on the service providers like suppliers, logistics service providers, etc. whose service in not up to the expectation and are affecting the service of the online companies. To solve this issue efforts are to be made to educate these service providers the importance of using technology and provide them incentives to use these technology and shift their focus on to the customers. Seeing the prospects of growth a lot of new online retailers have come up and there is a price war going on to attract more and more customers which is putting pressure on the profitability of the companies so it has become extremely important to manage cost to increase profits which is only possible by building an efficient backend- a nationwide delivery network, warehouses , inventory management , logistics, efficient teams to manage all this therefore supply chain management becomes an important factor on which companies depend to sustain in this industry. Flipkart obtained funding from Tiger global management in 2010 which is being utilized by the company for strengthening supply chain capacity and upgrading technology platforms, including automation at warehouses.

The goal: HAPPY CUSTOMER!!!

Read the product reviews and happy customer stories that make Flipkart a favourite shopping place. A few…” I ordered this on September 12th and received this on 15th. Great service by Flip kart as ever. Keep up the good work!”-MP3 player customer, “The delivery of flipkart as usual is great and my one came before the expected time. Packing was excellent.”-happy camera customer and many more stories. So when are you shopping on Flipkart?


References:
  1. http://www.flipkart.com/about-us
  2. http://opepiimraipur.blogspot.com.au/2011/12/best-practices-at-flipkart.html
  3. http://logisticsweek.com/news/2011/03/not-only-words/
  4. http://www.afaqs.com/news/story.html?sid=36761_Service+selection+and+price+are+the+three+pillars:+Sachin+Bansal

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